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NLRB Withdraws Proposed Rule About Student Workers - What Does It Mean for Private Colleges and Universities?

April 30, 2021

NLRB Withdraws Proposed Rule About Student Workers - What Does It Mean for Private Colleges and Universities?

April 30, 2021

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The Board has long tussled over the issue of whether student workers are “employees” under the Act.

On March 15, 2021, the National Labor Relations Board withdrew a proposed rule that would have established that students who perform services for compensation at private colleges and universities in connection with their studies are not “employees” within the meaning of the National Labor Relations Act. So, what does that mean for higher education?

For now, the withdrawal means that the Act will continue to cover students who participate in work-study programs or work part time as teaching assistants at private colleges and universities. In the future, this decision is likely indicative of more to come from the Biden administration in promoting and supporting unionization. With additional legislation and rulemaking in the pipeline, private colleges and universities need to pay close attention to what is happening on the federal stage, as well as on their campuses.

History of Proposed Rule

The Board has long tussled over the issue of whether student workers are “employees” under the Act. The determination of employee status is significant because if an individual is not an employee, they are not covered by the Act’s broad spectrum of rights, which includes the right to unionize. For example, the Act specifically excludes supervisors from the definition of employee, which is why statutory supervisors do not have a federal right to engage in concerted protected activity, such as a strike.

For decades, the Board had held, for the most part, that individuals who were primarily students at a private college or university were not employees for purposes of the Act just because they provided some services for remuneration. However, in 2000, the Board, under the Clinton administration, held for the first time that certain university graduate student assistants were statutory employees. See New York University, 332 NLRB 1205 (2000).

This Clinton-era holding began a series of flip-flops between subsequent administrations. Four years later, the Board under the Bush administration reasserted the principle that graduate student assistants were primarily students and not statutory employees. See Brown University, 342 NLRB 483 (2004). Then, in 2016, the Board under the Obama administration not only overruled the Brown decision, but expanded coverage to include both externally funded graduate research assistants and undergraduate university student assistants. See Columbia University, 364 NLRB No. 90 (2016).

This roller coaster of decisions made it difficult for private colleges and universities to know at what point, if any, a student worker became an employee under the Act, as it changed from administration to administration. So in September 2019, the Board under the Trump administration, rather than issuing a new decision, proposed a new rule that would have a created a consistent standard that could not be changed by a singular Board decision.

The proposed rule stated explicitly:

Students who perform any services, including, but not limited to, teaching or research assistance, at a private college or university in connection with their undergraduate or graduate studies are not employees within the meaning of Section 2(3) of the Act.

However, the proposed rule did not go into effect immediately, as it had to first pass through a comment period. Despite the comment period ending in December 2019, the proposed rule lingered, and the Board failed to finalize it prior to Biden’s inauguration in January 2021.

Biden’s immediate appointment of Lauren McFerran as the Board’s new chair on the day of his inauguration was the final nail in the coffin for the proposed rule. Originally, as a Board member, McFerran had strongly dissented from the proposed rule. Consequently, on March 15, 2021, the Board, now with McFerran as the chair, withdrew the proposed rule from consideration.

Effect of Withdrawal

Because the rule never made it past the proposal stage, the withdrawal itself does not change the legal standard for determining when an individual who is both studying and working at a private college or university is an employee under the Act. Thus, private colleges and universities should continue to analyze the employee status of students under the 2016 Board case Columbia University.

As a reminder, in Columbia University, the Board found that student workers are statutory employees under the Act if there is a common-law employment relationship. There is no exception for individuals who are “primarily” students, or whose work for the college or university simultaneously serves their own educational interests (such as research assistants). This includes students at both the undergraduate and graduate level.

At a practical level, private universities and colleges may see an increase in union activity among student workers, including efforts to unionize. Because the proposed rule is now dead in the water, and the Biden administration will control Board leadership for at least the next four years, it is anticipated that unions will feel more comfortable investing resources toward organizing student workers.

What About Other Federal Laws?

Keep in mind that the definition of “employee” under the Act, and related Board rules and decisions, does not affect the definition of “employee” under other federal or state employment laws. For example, the Fair Labor Standards Act (FLSA) has its own rules relating to student employment and exemptions from the federal minimum wage and/or overtime.

That said, Biden campaigned heavily on a pro-worker platform, so it is entirely possible that the U.S. Department of Labor, which oversees the Board, the FLSA and other federal employment laws, will push for additional changes that could affect private universities and colleges. All employers should remain vigilant as the Democrat-controlled legislative and executive branches seek to make good on pro-worker campaign promises.

What's Next?

Next on the horizon is the Protecting the Right to Organize Act of 2021 (PRO Act), which the House of Representatives passed by a vote of 225-206. The PRO Act would be the largest overhaul of federal labor law in decades and, if passed, would drastically change employee and employer rights as they relate to union organizing, collective bargaining and protected concerted activity.

There is not enough support currently in the Senate to pass the PRO Act as written. That said, Biden has expressed support for the PRO Act and there is talk of including it in the proposed multitrillion-dollar infrastructure bill. Employers should keep a close eye on this particular legislation as it moves through the federal legislative process.

Meanwhile, at the agency level, Biden will not be able to have a majority-Democrat Board until at least the end of August 2021, when Republican William Emanuel’s term ends. Board members must be confirmed by the Senate though, so Biden’s ability to turn the Board to a Democrat majority will depend on how smoothly the confirmation process goes.

Once there is a Democrat majority, employers, including private colleges and universities, should expect not only Board decisions that will lean in favor of unions and employees, but also rulemaking, which is more difficult to change from administration to administration. In fact, McFerran stated during a panel discussion that she was a “big believer” in the benefits of the administrative rulemaking process, indicating that the Board, under her leadership, may utilize rulemaking as a strategy to mold labor policies and standards in a more lasting way.

About Duane Morris

With the labor landscape constantly in flux, Duane Morris is dedicated to keeping you abreast of relevant changes. The UpdateED blog will continue to provide insight and analysis of new legislation, rules or decisions may affect employers in the education industry.

For More Information

If you have any questions about this Alert, please contact Linda B. HollinsheadEve I. Klein, Elizabeth Mincer, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group, and of the attorneys in our Higher Education Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.